BT 2001 Annual Report Download - page 115

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33. Employee share schemes
The company has a share ownership scheme used for employee share allocations (pro¢t sharing), savings-related share option
schemes for its employees and those of participating subsidiaries, further share option schemes for selected group employees and
an employee stock purchase plan for employees in the United States. It also has several share plans for executives.
Share option schemes
The major share option scheme, the BT Employee Sharesave Scheme, is savings related and the share options are normally
exercisable on completion of a three- or ¢ve-year Save As You Earn contract. A similar savings related scheme exists for group
employees based outside the UK. Under the other share option schemes, share options are normally exercisable between the third
and tenth anniversaries of the date of grant. Under a new option scheme introduced in 2000, scheme participants are awarded
options which may vest after three years and which may be linked to a performance target. Options outstanding under these
share option schemes at 31 March 2000 and 2001, together with their exercise prices and dates, were as follows:
Number of ordinary shares
Normal dates of exercise
Option price
per share
2001
millions
2000
millions
Savings-related schemes
2000 404p –4
2000 306p –37
2001 267p 58 62
2001 583p 34
2002 359p 44 48
2002 949p 34
2003 518p 35 38
2003 818p 5–
2004 844p 23 29
2005 727p 32 –
Total 203 226
Global share options
2001-2010 885p 2–
2002-2011 885p 3–
2003-2012 885p 3–
Total 211 –
Other share option schemes
1993-2011 289p to 1206p 56
Total options outstanding 216 232
In the period 1 April 2001 to 22 May 2001, no share options were granted, and options over eleven million shares lapsed.
During the year ended 31 March 2001, BT granted options over 49 million shares (2000 ^ 34 million, 1999 ^ 46 million) of
which 41 million were under employee sharesave schemes and eight million were under the BT Global Share Option Plan. The
weighted average fair value of share options granted during the year ended 31 March 2001 has been estimated on the date of
grant using the Black-Scholes option pricing model. The following weighted average assumptions were used in that model: an
expected life extending one month later than the ¢rst exercise date; estimated annualised dividend yield of approximately 2%
(2000 ^ 2%, 1999 ^ 3%); risk free interest rates of approximately 7% (2000 ^ 6%, 1999 ^ 7%) on options exercisable three years
after the date of grant and 7% (2000 ^ 6%, 1999 ^ 7%) on options exercisable ¢ve years after the date of grant; and expected
volatility of approximately 41% (2000 ^ 40%, 1999 ^ 30%).
The weighted average fair value of the share options granted in the year ended 31 March 2001 was 329p (2000 ^ 413p,
1999 ^ 313p) for options exercisable three years after the date of grant and 424p (2000 ^ 524p, 1999 ^ 309p) for options exercisable
¢ve years after the date of grant. The total value of share options granted by BT in the year ended 31 March 2001 was
»168 million (2000 ^ »170 million, 1999 ^ »139 million). In accordance with UK accounting practices, no compensation expense is
recognised for the fair value of options granted. See United States Generally Accepted Accounting Principles ^ IV Accounting for
share options for the treatment under US GAAP.
BT Annual report and Form 20-F 115